Tippets by Taps - Issue #118
This week we look at major themes coming out of retail’s big show, Visa buying Plaid in the first blockbuster fintech deal of the decade, Ant Financial’s long term ambition, a massive jewelry move and more. Enjoy!
NRF 2020: Experience, experience, experience
This week I attended NRF, Retail’s Big Show, for the first time. The sheer size of the production is nothing short of impressive. Navigating the 840,000 square feet of the Javits Center in New York, it’s hard to believe retail is struggling through a ’retail apocalypse.’ The show is a beacon of retail strength, with a reported 40,000 attendees representing retailers, vendors, consultants, media, and thinkfluencers from across the retail spectrum, walking the conference in search of their place in the future of a $30 trillion industry. Three major themes emerged from the show, all centered around better experiences.
Visa to Buy Plaid for $5.3 Billion in Bid to Reach Startups
Whoever had 13 days as their guess for when the first major fintech deal of 2020 would happen, you win the grand prize! A full 6 days earlier than the first monster payments deal of 2019, Visa acquired Plaid for $5.3 billion in cash and stock. For those of you asking, “Wait, what’s a Plaid?”, if you’ve ever linked your bank account to another service like Venmo, Coinbase or Expensify, you’ve used Plaid. They provide the underlying plumbing connecting the accounts and are the foundation beneath most of the US based fintech apps. It’s a tremendous outcome for Plaid who last raised at a $2.6bn valuation, proving the value of selling picks and shovels, not reliant on the success of any individual product. While some have questioned the steep price Visa is paying (25x projected revenues), there is strategic value beyond the revenues for the payments giant. Becoming more relevant to startups in the payments space is an obvious benefit and will support their existing efforts. More important however, is the access to consumer data that Visa now has. Visa has historically served as plumbing for banks - the payments rails operating behind the scenes and on the back of the card. With Plaid they now get access to tremendous amounts of consumer banking data on top of card data.
“This acquisition is the natural evolution of Visa’s 60-year journey from safely and securely connecting buyers and sellers to connecting consumers with digital financial services. The combination of Visa and Plaid will put us at the epicenter of the fintech world, expanding our total addressable market and accelerating our long-term revenue growth trajectory.” - Al Kelly, Visa CEO
While access to consumer banking data is sure to irk some banking partners, Visa’s pitch is surely going to go something along the lines of, “Look, we know we have access to a bunch more data but guess what - the infrastructure is also going to be a lot more secure. Oh, and we’re Visa and you still need us, so take it or leave it.”
For more behind the rationale of the acquisition, this piece by Ben Thompson of Stratechery is well worth a read.
China’s $7.6 Trillion Online Payments Market Is No Longer Enough For Jack Ma’s Ant Financial
Ant Financial is poised for a big decade ahead. The company has built the largest payment network in the world, along with Tencent dominates both online and offline payments in China, and as of last November is now going after international users. As the company prepares to go public, they are looking at an expanded set of customers: financial institutions.
Ant’s president of advanced technology business group, Geoff Jiang, told FORBES ASIA in an interview that the operator of the popular Alipay e-wallet wants to offer Chinese banks a wide range of technology products and services. Although the company spent years competing with them in payments and wealth management, it now plans to sell in-house expertise to the same banks and help them digitalize their operations with tools such as cloud computing and data analytics…a partnership could involve the banks using Ant’s data technology to process loans, design tailored products or combine diverse sets of data to assess risks and creditworthiness.
With 200 banking customers already and aiming for 1,000 by end of year, it’s not hard to see Ant continuing on its rocketship trajectory. Their long term goal is to be behind every transaction in the world. Ambitious, but they have the pieces to do it. I believe Ant will ultimately be a more valuable company that its e-commerce parent Alibaba, it’s a matter of when, not if.
How Tiffany Moved 114,000 Gems Without Getting Robbed
For any fans of heist movies wondering how jewelry is moved in real life, now we know. In a scenario that could have come straight out of Ocean’s 14, Tiffany’s moved almost 115,000 separate pieces out of its 10-story New York City flagship and into an old Nike store while they undergo renovation.
There were 300 cameras monitoring the Tiffany store and about as many in the temporary store, as well as a few more trained on the route along the sidewalk, that were live feeding monitors surveilled by other security officials in the two stores and at Tiffany’s distribution center in Parsippany, N.J.
Employees had been told to keep word of the move quiet…Well before [move day], Tiffany officials had monitored social media, looking for hints of potential criminality. Tiffany hired a company that tracks social media and provided a list of key words like “move,” “727 Fifth Avenue” — the address of the old store — “6 East 57th Street” and the move date.
As an extra security measure, Tiffany put up a tent in front of the door of the temporary store to block the view. Every item was entered into an inventory-control system when it was packed in the old store and checked off when it was unpacked in the temporary one.
According to Tiffany’s and the police nothing was snatched during the move. But of course they would say that 😉
Bailout Up to $500 Million Proposed for Taxi Drivers Trapped in Loans
In May we talked about the New York Times’ two part expose on the con thoughts of immigrant workers were caught in.
Trapped in reckless loans made by bankers making huge profits, this is a well researched and devastating story with an unfortunately recurring theme: all too often those taken the most advantage of are the less fortunate, those most in need, new to the country and thus different, lacking in English proficiency, searching for their version of the American dream.
Now, in the most far-reaching step taken in response to the Times investigation, a panel appointed by the New York City mayor “intends to propose a bailout for thousands of taxi drivers trapped in exploitative loans that could cost as much as $500 million”. While the proposal is still in process and nothing has been finalized, I hope some configuration of a proposed public-private partnership manages to find a solution.
Quote I’m thinking about: “Whatever you are not changing, you are choosing.” - Laurie Buchanan